I have been a contributing writer of Forbes Asia magazine since March 2009. Previously, I was a staff writer with Forbes, producing stories for its global website and magazines that covered a wide spectrum of regional topics, including macroeconomic, corporate, and political issues.

Estate Planning for a Global Shipping Dynasty

Long before Li Ka-shing there was Pao Yue-kong. In his lifetime, shipping magnate Pao was richer and politically more engaged than Li, his next-door neighbor and close friend in Hong Kong’s Deep Water Bay. Upon Pao’s death at 73 in 1991, David Wilson, the city’s colonial governor, hailed him as”as “perhaps the first local business- man to achieve truly international stature.”

He left behind a great fortune, and today two members of the list of Hong Kong’s richest owe the foundation of their wealth to that fortune–No. 8 Peter Woo and No. 23 Helmut Sohmen–who married two of his four daughters.

Known simply as Sir Y.K., Pao was venerated as “the king of the sea” and the “Onassis of the East.” As Hong Kong’s first “sea lord,” he helped the city sail into its golden age of entrepot trade. At its peak his fleet, at 500 ships, was only slightly smaller than the Soviet Union’s navy.

Pao left World-Wide Shipping to his eldest daughter, Anna, and her husband, Helmut, an Austrian lawyer-turned-businessman. Then, in 2010, Sohmen, now 74, quietly ceded day-to-day management to their elder son, Andreas, 42. He lives in Singapore–where the business is now based–with his Korean-American wife, Doris, and their two children. For investors the changing of the helmsman was hardly discernible. “The company continues to be very conservative and also being very opportunistic, opportunistic being doing the right thing at the right time,” says Vikas Halan, a senior analyst at Moody'sMoody's‘s.

Sohmen and his family’s wealth is estimated at $2.5 billion this year.

Pao’s influence was felt beyond shipping. He took audacious, meticulously calculated maneuvers to beat Jardine Matheson'sJardine Matheson's‘s Henry Keswick and then Singapore billionaire Khoo Teck Puat for control of major British hongs Wheelock and Wharf. He cofounded Hong Kong’s second airline, Dragonair, and acted as one of three white knights, along with Khoo, in jointly buying a controlling stake in Standard CharteredStandard Chartered bank. He quietly left his mark on politics through friendships forged with Hong Kong’s colonial governors and global political titans of the era, from Deng Xiaoping to Ronald Reagan and Margaret Thatcher. And within the family his ethos lives on, encapsulated in his motto “Exercise persistently, use sparingly, work diligently.”

Pao passed his empire on to his daughters, with each share managed by their husbands. “Father was a good organizer, and his succession was very well planned, way before he died,” says Anna, now 68. “He told everybody what they were going to get. They were all equal parts. Otherwise, someone would have been unhappy.”

The Wharf business went to the second daughter, Bessie, her banker husband, Peter Woo, taking charge. To cater to the rising demand from affluent mainland tourists, he has expanded its stable of commercial properties and is now the city’s biggest landlord of retail space. FORBES ASIA put their family’s fortune at $7 billion this year.

Little is known of the value of two unlisted parts handed down to Pao’s other daughters: the family’s business in Japan, where he built the foundation of his fleet of ships, and a Hong Kong investment company, World-Wide Investment. Details are not shared even among family members.

The third daughter, Cissy, and her Japanese architect husband, Shinichiro Watari, own the Japan unit, which deals in corporate insurance, trading and the retailing of ultraluxury cars such as Rolls-Royce and Maserati. They live in Tokyo, but Cissy spends much of her time in Hong Kong, where she’s led the Hong Kong Arts Centre for more than seven years.

The youngest daughter, Doreen, and her husband, Edgar Cheng Wai Kin, got World-Wide Investment, which also manages the Pao family’s private money. Cheng, who abandoned a career in cancer research in the U.S. as a result, went on to chair the Hong Kong Stock Exchange and head the Hong Kong government’s central policy unit in the 1990s. He has continued to head the investment firm after the couple’s divorce in the late 1990s.

Pao always saw the heart of his empire as shipping. His refugee status in colonial Hong Kong after his entire clan was uprooted from Shanghai underpinned that belief. “He came from a banking background but went into shipping because he had the refugee mentality,” recalls Anna. “He wanted movable assets. If there was a war, there would be ships moving things somewhere.”

He focused on oil tankers and bulk carriers. Son-in-law Helmut Sohmen diversified into gas–and, by extension, into offshore production and storage–by buying the world’s largest gas-carrier fleet in 2003 from Norway’s Bergesen. Bergesen and World-Wide Shipping became the BW Group in 2007, and headquarters were set up in Singapore, the world’s busiest transshipment port. Its Oslo-listed unit, BW Offshore, is one of the world’s largest owners and operators of converted tankers for offshore oil and gas production.

HSBC, which gave Pao a bank loan to purchase his first new ship and made the smart bet to invest in his company, still holds 7% of the private BW Group, with the family owning the rest. Also in 2007 Sohmen split off the family’s bulk shipping business; he’s kept it private and outside of BW. Overseen from Singapore by James Marshall, the husband of Sohmen’s daughter, Michele, Berge Bulk has tripled the capacity of its fleet to 36 vessels and is one of the world’s largest dry bulk carriers. In November the BW Group floated its liquefied petroleum gas shipping unit on the Oslo Stock Exchange, selling a 55% stake and raising $297 million. All told, the group boasts a fleet of 109 vessels. Pao would be pleased to know his family is still “king of the sea.”

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